Business Tech

The chill between Oracle and the European Commission may finally be thawing.

European antitrust regulators have been playing a wary bouncer to Oracle's planned takeover of Sun Microsystems, and they've been especially attentive to the software maker's intentions regarding Sun's MySQL operations. In November, their concerns about the future of the open-source MySQL database software led to a formal thumbs-down to the acquisition.

But recent discussions between Oracle and the EC have apparently been fruitful, as Oracle on Monday pledged 10 "commitments to customers, developers and users of MySQL."

Among other things, the company pledged to spend more cash than Sun did on MySQL development and to set up advisory boards to include MySQL customers. Oracle also said it would not require paid support to get a commercial MySQL license and that it would offer flexible support contracts to customers.

in addition, it addressed licensing and copyright issues relevant to third-party developers of MySQL storage engines, promising to maintain the openness and flexibility of MySQL's Pluggable Storage Engine Architecture and not require commercial licenses to use the storage engine APIs.

In response, the European Commission on Monday issued a statement suggesting that it's warming up to the idea of a Sun-Oracle combination.

"Today's announcement by Oracle of a series of undertakings to customers, developers and users of MySQL is an important new element to be taken into account in the ongoing proceedings," said the EC in its statement. "In particular, Oracle's binding contractual undertakings to storage engine vendors regarding copyright non-assertion and the extension over a period of up to 5 years of the terms and conditions of existing commercial licenses are significant new facts."

EC Competition Commissioner Neelie Kroes expressed optimism for a satisfactory outcome, one that won't hurt the competition in the European database market.

But according to the Reuters news agency, critics of Oracle aren't impressed with Oracle's latest promises.

"This is purely cosmetic, totally ineffectual. Neither storage engine vendors nor 'forkers'--developers of derived versions--nor enterprise users would have a basis on which to invest in MySQL-related innovation," said Florian Mueller, a spokesman for MySQL co-founder Michael "Monty" Widenius, who has been one of the loudest voices in opposition to the deal.

Fearing that Oracle will try to weaken MySQL to strengthen its own database products, Widenius has been intent on drumming up support among the faithful, asking them to urge the EC to stop the merger for good.

The battle for Sun began in April when Oracle's $7.4 billion bid won over Sun's board. Subsequent approval by shareholders and the U.S. Justice Department seemed to solidify the deal.

Summarized below, Oracle's 10 commitments outline how the company intends to keep MySQL alive as a competitive database product.

1. Continued Availability of Storage Engine APIs. Oracle promises to maintain and enhance MySQL's Pluggable Storage Engine Architecture, which gives users the ability to select from a variety of different storage engines that can plug into a MySQL database server.
2. Non-assertion. As copyright holder, Oracle will change Sun's current policy and will not assert against anyone that a third-party vendor's implementations of a storage engine must be released under the GPL (GNU General Public License) because they used the APIs that are part of the Pluggable Storage Engine Architecture. Further, Oracle will not require a commercial license from third-party storage engine vendors to implement the Pluggable Storage Engine Architecture's APIs.
3. License commitment. When current MySQL OEM agreements with storage vendors end, Oracle will offer an extension up to December 10, 2014, with the same terms and conditions.
4. Commitment to enhance MySQL in the future under the GPL. Oracle promises to enhance MySQL, including version 6, under the GPL. Oracle won't update MySQL Enterprise Edition without also updating MySQL Community Edition and will make the source code of Community Edition available to the public at no charge.
5. Support not mandatory. Customers won't be required to buy support services from Oracle to get a commercial license for MySQL.
6. Increase spending on MySQL research and development. Oracle promises to spend more money than Sun did to continue to further develop MySQL, both the commercial and GPL editions.
7. MySQL Customer Advisory Board. No later than six months after the anniversary of the closing, Oracle will create a customer advisory board to offer guidance and feedback on MySQL development. The board will include end users and embedded customers.
8. MySQL Storage Engine Vendor Advisory Board. No later than six months after the anniversary of the closing, Oracle will create and fund a storage engine vendor advisory board for guidance on issues important to MySQL storage engine vendors.
9. MySQL Reference Manual. Oracle will continue to update and provide a free download to a MySQL Reference Manual similar to the one currently available from Sun.
10. Preserve Customer Choice for Support. Oracle will make sure that end-user and embedded customers paying for MySQL support can renew that support each year or every few years, depending on the customer's preference.

With possible action by the Federal Trade Commission looming, an unidentified Dell executive is cited prominently in legal documents as a person who might exonerate Intel, or at least mitigate the severity of the charges leveled against it for alleged antitrust behavior. So, what is known about this Dell mystery man?

This week the Dell executive, referred to as "Mr. A," was cited throughout the European Union ombudsman's "decision" on on a complaint filed by Intel about the European Commission's ruling against the chipmaker. Ombudsman P. Nikiforos Diamandouros' November 18 decision found "maladministration" on the part of the Commission because of its failure to make a "proper note" of a meeting with Dell--represented most prominently by Mr. A in the the ombudsman's decision.

Diamandouros has been the The European Union's ombudsman since April of 2003.

Most importantly, Mr. A is brought up by Intel as a person who has made exculpatory statements--and therefore could refute allegations such as those made about Intel and Dell in New York Attorney General Andrew Cuomo's complaint against the chipmaker.

And who is Mr. A? He was "a senior Dell executive" and the person "responsible for Dell's relationship with Intel," according to the ombudsman's published statement.

What else is known about Mr. A? Intel asserts in its complaint to the Commission--which the ombudsman responded to in its decision--that "Mr. A's FTC [Federal Trade Commission] testimony exonerates Intel and contradicts the allegations contained in the statement of objections concerning Dell's relationship with Intel."

And Intel has had more to say about this person. "Mr. A again gave sworn testimony confirming that the key points made in his 2003 FTC testimony, to the effect that Dell did not have an exclusive relationship with Intel and that Intel did not 'threaten' or 'punish' Dell for considering a dual-source [Intel and AMD] strategy."

Also in the ombudsman's decision--which refers to Intel as the complainant: "It is clear from these events that the Commission sought to conceal and suppress exculpatory evidence. Also in the complainant's view, this misconduct (and the failure to make a complete note of the meeting which would have eliminated any debate as to what Mr. A said) constitutes a serious act of maladministration."

Intel spokesman Chuck Mulloy said Thursday that Intel continues to talk to the FTC. "Yes we are talking. We are continuing to answer their questions concerning our business practices and now we are also explaining the settlement we just completed with AMD [Advanced Micro Devices]," Mulloy said.

Experts say Intel has been instrumental in driving down PC prices, one of the key indicators of competition and one charge New York's Attorney General cannot easily level against Intel in its antitrust lawsuit.

New York Attorney General Andrew M. Cuomo on Wednesday filed a federal lawsuit against Intel accusing it of paying computer makers rebates to illegally maintain its monopoly power and preventing AMD from gaining business with PC makers.

One of the operative charges in the complaint centers on prices. "Intel launched an illegal campaign to deprive AMD of distribution channels and consumers of product choice and lower prices," the complaint alleges.

Not so fast, say some experts. "Prices are falling, buyers are not complaining about Intel's loyalty discounts, and the lower prices produce obvious and immediate benefit for consumers," said Joshua D. Wright, professor at George Mason University School of Law, and a scholar in residence at the Federal Trade Commission until 2008.

"Given the intuitive and easy to grasp nature of the consumer benefits of discounting contracts in the Intel case, I suspect that judges will be less likely to condemn these practices without real proof of actual consumer harm. I'm skeptical that AMD, (New York), or the (Federal Trade Commission) will be able to produce that here," Wright said.

And prices continue to fall. One of the most recent examples of steep downward PC price pressure is ... Read more

The European Commission must be feeling a bit silly right about now. Despite insisting that Oracle has not responded to its requests for comment and concessions in its planned acquisition of Sun Microsystems (and the open-source database MySQL), Amazon.com recently offered the EC all the proof it needs that MySQL competition remains alive and well.

Competition at pennies an hour.

(Credit: Amazon)

For those who missed it, Amazon announced last week a fork of the popular MySQL database, called RDS (Relational Database Service). RDS is essentially a hosted version of MySQL, one that developers can write to at the minuscule cost of pennies per hour.

Oracle hasn't even started with MySQL yet, and it already faces significant competition, not to mention the other MySQL forks (e.g., Drizzle).

As Redmonk analyst Stephen O'Grady writes:

From here, it seems fairly clear that while RDS will not be the best option for every MySQL user, it will find a more than adequate market of customers who are willing to trade money for time, as (former MySQL CEO) Marten Mickos might put it. Assuming that Amazon can realize its typical economies of scale by amortizing the management and administration costs of the service over a wide array of machines, the product should more than pay for itself simply by widening the addressable market.

How much wider will it make the addressable market? At a minimum, it will lower the barriers to entry for customers with relational needs (read: most customers) and a lack of cloud expertise. It will be fascinating to see, however, if Amazon has far grander ambitions in mind.

Interesting, and somewhat unfair to Oracle. Presumably Amazon's entrance into the MySQL market is A-OK because Amazon isn't currently a database company, but it is a significant and growing infrastructure provider. Why should it get to own a complete stack, but Oracle can't?

That, after all, is what Oracle is attempting to accomplish with the Sun/MySQL acquisition. Sun gives it hardware, while MySQL gives it a strong entry into the Web database market and an effective hedge against Microsoft in lower-end enterprise needs.

Oracle's bid for Sun/MySQL, in other words, isn't about squelching competition, but rather about enhancing it. Amazon's RDS proves that strong, viable competitors to MySQL can arise from within the MySQL community, which disproves the EC's argument that Oracle's control of MySQL will somehow crush competition.

And if the deal doesn't hurt competition, as Amazon RDS all-but-proves it doesn't, then the EC's opposition is hollow and should be shelved, as The 451 Group's Matt Aslett argues.

It's time for the EC to acknowledge it was wrong, and move on. Amazon surely has. But until the EC makes a final decision, Oracle (and MySQL) can't.

MySQL co-founder Michael "Monty" Widenius is leading a chorus of voices expressing growing apprehension over the proposed Oracle-Sun merger.

In a statement posted on his blog on Monday, Widenius said the European Commission is "absolutely right to be concerned" about the $7.4 billion takeover of Sun by Oracle, and he urged Oracle to sell MySQL to clear up any antitrust issues.

Although the deal received the thumbs-up from the U.S. Department of Justice in August, the Commission opened a probe in early September, citing fear that Oracle's ownership of MySQL could pose a competitive threat.

In his blog, Widenius asked Oracle "to be constructive and commit to sell MySQL to a suitable third party, enabling an instant solution instead of letting Sun suffer much longer." The famed MySQL developer, who departed Sun earlier this year, said that he wishes Sun "all the best, but MySQL needs a different home than Oracle, a home where there will be no conflicts of interest concerning how, or if, MySQL should be developed further."

Another voice uneasy about the Oracle-Sun venture is Florian Mueller, an EU policy expert who is a former MySQL shareholder and adviser. Mueller had helped Widenius' new company, Monty Program, urge the EU to investigate the anticompetitive effects of a MySQL owned by Oracle.

"Letting Oracle have MySQL is worse than putting the fox in charge of the henhouse, because the hens are no threat to the fox, while MySQL makes Oracle lose customers and forces it to grant discounts to customers threatening to defect," Mueller said in a statement.

Monty Widenius

(Credit: MySQL/Sun Microsystems)

"Every day that passes without Oracle excluding MySQL from the deal is further evidence that Oracle just wants to get rid of its open-source challenger, and that the EU's investigation is needed to safeguard innovation and customer choice," Mueller added. "This is highly critical because the entire knowledge-based economy is built on databases."

Though several analysts have questioned the EC's motivation for probing the deal, Mueller firmly backs the commission.

"It's inappropriately arrogant for some interested parties to suggest that the EC has yet to understand the case," he said. "The EC is really doing a great job under huge time pressure." In August, Mueller helped write a position paper (PDF) on MySQL that Widenius' Monty Program gave to the EC.

And in yet another condemnation, Richard Stallman, founder of the free-software movement, wrote an open letter to the EU on Monday opposing an Oracle-owned MySQL as a threat that would hinder its further development in the open-source community.

Other prominent names, though, disagree. Earlier this month, MySQL ex-CEO Marten Mickos urged the EU to OK the deal, arguing that by delaying the merger, the EU is hurting the very competitive atmosphere that it claims to want to protect.

Major database players, including HP and IBM, have already reportedly taken advantage of the delay to win over customers from Sun.

In the meantime, Sun continues its downward spiral. Late Tuesday, the company confirmed that it would lay off another 3,000 employees, about 10 percent of its total workforce, over the next year. This latest round is in addition to 6,000 jobs cuts announced almost a year ago as part of the company's restructuring plan.

On Oracle's part, CEO Larry Ellison said last month that despite the EU's probe, Oracle has no intention of spinning off MySQL.

Clarification at 9:35 a.m. PDT: Widenius is a co-founder of MySQL, the company.

Mårten Mickos

As the European Commission continues to evaluate the potentially deleterious effects of Oracle's proposed acquisition of Sun Microsystems and its open-source MySQL database, concern is rising that delay will harm MySQL without helping competition.

One who shares this concern is former MySQL CEO Mårten Mickos. On Thursday, Mickos sent a letter to Neelie Kroes, the European Union's competition commissioner, urging that the deal be approved for the good of the market and MySQL. He also spoke with CNET News' Stephen Shankland on Thursday.

Below is the edited full text of the letter.

Helsinki 8 Oct 2009

Mrs. Neelie Kroes
Commissioner for Competition
European Commission, J70
B-1049 Brussels/Brussel
BELGIQUE/BELGIE

Dear Commissioner Kroes,

I am writing to you regarding your review of Oracle's pending acquisition of Sun Microsystems. As I understand it, the EU Commission is concerned about a risk of undue concentration of power in the database market. Having been the CEO of MySQL from 2001 to 2009, and built a business that was serving a new market unmet by Oracle and others, I can agree with the questions posed, but I do not share the concerns that have been expressed. In the following, I will explain why.

In brief, my reasoning is as follows:

1. Oracle has as many compelling business reasons to continue the ramp-up of the MySQL business as Sun Microsystems and MySQL previously did, or even more.
2. Even if Oracle, for whatever reason, would have malicious or ignorant intent regarding MySQL (not that I think so), the positive and massive influence MySQL has on the DBMS market cannot be controlled by a single entity--not even by the owner of the MySQL assets. The users of MySQL exert a more powerful influence in the market than the owner does.

Many expected Oracle to harm MySQL as far back as 2005, when they acquired the InnoDB storage engine that plays a crucial role for many MySQL customers. And yet Oracle increased their investment in InnoDB since that time, making MySQL a stronger player in the market.

For further detail on my views on Oracle's intent, please see this interview with me in Forbes Magazine in April 2009.

It may at first blush seem counterintuitive that control of the MySQL assets does not automatically bestow control of the MySQL installed base. But the free installed base of MySQL--enormous on a planetary scale--is voluntarily but not mandatorily coupled to the commercial market of MySQL. It produces huge benefits to the MySQL business, but it is not controlled by it.

Background

The impetus to write this letter comes from my concern with the talented teams of the MySQL business unit and of Sun Microsystems in general. I am also troubled by certain factual distortions about a subject matter that I am intimately familiar with: MySQL and its business model. Open-source business models are complicated and quite different, and it took many years to fully understand and shape the one of MySQL.

A Finnish citizen, I served as chief executive officer of MySQL from early 2001 to February 2008, when Sun acquired MySQL. After that, I served as senior vice president of the database group at Sun until the end of March 2009. Being the only person to have served as the CEO of MySQL and to have attended every board meeting ever held, I believe I have unique insights into these matters.

To be clear, I resigned from my position in March 2009, and I presently have no commercial or financial interests in the MySQL ecosystem, Sun, or Oracle (or any other vendor in the DBMS market, for that matter), other than my loyalty to Sun employees in general and the MySQL team in particular.

MySQL's Markets and Installed Base

MySQL is the world's most popular open-source relational database, and potentially the most popular relational database of all. It has an enormous influence and impact on the usage and the buying patterns of relational databases (also known as RDBMSs), in particular for Web applications. One might even state that the Internet would not be what it is today, were it not for MySQL. Staffed by a highly talented team of passionate employees, the Swedish company MySQL grew the MySQL business from a small one in 2001 to a massive one in 2008.

In this discussion, the term "MySQL" refers to two things. On the one hand, there is the huge phenomenon MySQL--an estimated 12 million active installations under a free and open-source software license, millions, if not tens of millions, of skilled users and developers, and tens of thousands of corporations who use MySQL one way or the other.

On the other hand, there is the business of MySQL, which is growing rapidly, thus rewarding the owners of the assets (currently Sun Microsystems).

Those two meanings of the term "MySQL" stand in a close mutually beneficial interaction with each other. But most importantly, this interaction is voluntary and cannot be directly controlled by the vendor.

What I mean is that the vast and free installed base of MySQL is using it of their own free choice, unencumbered by the vendor and under no obligation or restraint. That is the nature of open source. And conversely, the MySQL business is supporting the free installed base of MySQL (by improving the product) voluntarily and in the hope of deriving benefit from the installed base.

This is the paradox of an open-source business, and it took me a long time to truly understand how powerful a force it is. It is unlike any traditional business. The key point is that both the users and the vendors of open source are engaged in a powerful free-market dynamic that cannot be contained by any single entity.

It is in everybody's interest that the two sides of MySQL produce benefit for and derive benefit from each other. But neither group can mandate or control the other one. This is a core philosophy of open-source software and more generally of the "architecture of participation" (as defined by Tim O'Reilly). There is a mutually beneficial voluntary relationship, but there is no control by one group over the other. In more colloquial terms: the owners of MySQL cannot force MySQL users to pay up, and the nonpaying users cannot force the business to subsidize them.

Anyone acquiring the MySQL assets will therefore acquire an ability to control the business aspect, i.e., meaning how MySQL is licensed commercially, but only an opportunity (and no free reign) to derive benefit from the free user base.

This explains how the MySQL business can be valued highly in the market ($1 billion, when acquired by Sun in February 2008) while at the same time providing no way of controlling its installed base. This unusual relationship between market share and installed base is at the core of the topic. The market share is small but controllable, to some degree. The installed base is enormous but not controllable. The installed base is, and can be, hugely beneficial to the owner of MySQL, but only to the extent and for as long as this owner of MySQL enjoys the trust of the installed base.

To put it in numbers, it may be useful to see the usage of MySQL, as divided into three categories:

European antitrust regulators on Monday published internal e-mails that detail alleged antitrust behavior by Intel.

The European Commission Monday published a "non-confidential version" of its May 13 decision against Intel, which imposed a fine of $1.45 billion against the chip giant. That decision found that Intel broke EC Treaty antitrust rules (Article 82) by engaging in illegal practices to exclude competitors from the market for "x86" central processing units (CPUs).

The EC action was based on complaints from Intel's chief rival, Advanced Micro Devices.

Intel appealed the decision in July to a European court, saying that "evidence was ignored or misinterpreted."

Today, the EC fired back. Some of Monday's particulars from the EC press release include:

• Intel rebates to Lenovo during year 2007 "were conditioned on Lenovo purchasing its CPU needs for its notebook segment exclusively from Intel. For example, in a December 2006 e-mail, a Lenovo executive stated: 'Late last week Lenovo cut a lucrative deal with Intel. As a result of this, we will not be introducing AMD based products in 2007 for our Notebook products'."

• Intel rebates to Dell from December 2002 to December 2005 were conditioned on Dell purchasing CPUs exclusively from Intel. For example, in an internal Dell presentation of February 2003, Dell noted that should Dell switch any part of its CPU supplies from Intel to its competitor AMD, Intel retaliation "could be severe and prolonged with impact to all LOBs [Lines of Business]."

• Intel rebates to HP from November 2002 to May 2005 were conditioned on HP purchasing no less than 95 percent of its CPU needs for business desktops from Intel (the remaining 5 percent that HP could purchase from AMD was then subject to further restrictive conditions set out below). In a submission to the Commission, HP stated that "Intel granted the credits subject to the following unwritten requirements: a) that HP should purchase at least 95% of its business desktop system from Intel ..." An HP executive wrote: 'PLEASE DO NOT... communicate to the regions, your team members or AMD that we are constrained to 5% AMD by pursuing the Intel agreement.'"

• The EC also cited "Naked Restrictions" such as: "Intel payments to Acer were conditioned on Acer postponing the launch of an AMD-based notebook from September 2003 to January 2004. For example, in a September 2003 email, an Intel executive reported: "good news just came from [Acer Senior Executive] that Acer decides to drop AMD K8 [notebook product] throughout 2003 around the world...They keep pushing back until today, after the call with [Intel executive] this morning, [Acer Senior Executive] just confirmed that they decide to drop AMD K8 throughout 2003 around the world. [Acer Senior Executive] has got this direction from [Acer Senior Executive] as well and will follow through in EMEA [Europe Middle East and Africa region]".

AMD was quick to chime in with a comment Monday. "This is the first time that Intel has had to confront now publicly available facts of its illegal behavior and it won't be the last. The U.S. FTC and New York Attorney General's continuing investigations and AMD's civil case against Intel will provide other clear demonstrations of Intel breaking the law, and we remain confident that we will win our U.S. civil case against Intel, which goes to trial in March," AMD said.

Intel also issued a response Monday. "There is nothing new here. This Decision reflects the underlying bias we have come to expect from the case team that ran this investigation," Intel said. "The Commission relied heavily on speculation found in e-mails from lower level employees that did not participate in the negotiation of the relevant agreements," Intel said. "At the same time, they ignored or minimized hard evidence of what actually happened, including highly authoritative documents, written declarations and testimony given under oath by senior individuals who negotiated the transactions at issue."

Intel continued: "Also, the Commission consistently construed ambiguous documents in a manner adverse to Intel, while overlooking or dismissing authoritative documents as 'insufficiently clear' when they contradicted the Commission's case. This pattern occurred across the board with respect to documents and statements submitted not only by Intel but also by third parties. The result was that the Commission dismissed or ignored extensive exculpatory evidence."

The European Commission's decision to further probe Oracle's acquisition of Sun Microsystems has raised both questions and speculation.

Oracle said in April that it would acquire Sun, a server maker and software company whose assets include the open-source MySQL database. The deal has been approved by the U.S. Justice Department and by Sun's shareholders.

But the European Commission, the regulatory arm of the European Union, announced last week that it was opening an in-depth investigation into the $7.4 billion planned takeover, saying that a preliminary probe raised the specter of threats to competition in the database market. Oracle's enterprise software lineup includes the company's proprietary database applications.

The Commission has until January 19, 2010, to make a final decision on the Oracle-Sun deal.

But are the EU's regulators really concerned about the open-source future of MySQL? Or is there a larger agenda at play here?

Certainly, the in-depth investigation didn't come as a shock, says Gartner database analyst Donald Feinberg. "Nobody was surprised that this happened because this is coming from the organization that slapped Intel with a big fine and that went after Microsoft with a vengeance."

I recently spoke by phone, in separate conversations, with Feinberg and his Gartner colleague George Weiss to get their views on the Commission's action. This condensed Q&A folds together their responses.

Q: Since the EU/EC said they were further investigating the Sun-Oracle deal, there's been speculation as far as their motives. One of the EC's stated reasons is they're concerned that once Oracle has control of MySQL, there may be less incentive to further develop the product. Do you see that as the EC's motive, or do think there's more to the picture?
Feinberg: I think their statement that they're expanding their investigation proves that not only don't they understand anything about open-source software, but it proves beyond a shadow of a doubt that there's another agenda. If Oracle did what you just said--let's say they took the product, put it on the shelf, and didn't develop another line of code for it, Monty and Maria DB would become the new MySQL overnight. That's what open-source software is about. It has nothing to do with MySQL and everything to do with the fact that an open-source software product can fork anytime. If Oracle did nothing with the product or tried to destroy it, they would not be successful. You're talking about a product that has momentum in the marketplace. Now the problem is measuring that momentum in the marketplace. But the fact of the matter is they cannot destroy the product.

Q: And this is simply by virtue of the fact that it's open source?
Feinberg: Exactly. If Oracle decided to stop developing the Oracle DBMS, that would be the end of it because nobody else has the source code. Nobody else could do it. But the beauty of an open-source project is it's open source. Anybody can take it and move in the direction they want to move in. If you want to have an open-source product like MySQL, and Oracle is not going to nurture it and develop it and enhance it, then it will fork off and go somewhere else. So the whole premise the EC has, that Oracle could damage MySQL under the assumption that it's the leader in open-source DBMS, is wrong. Oracle will not do that. That would be a really stupid move, and Oracle's not stupid. Clearly the EC is using that for their agenda to look for ways to stop this deal. They're looking for ways to stop this deal because of other European companies who are putting pressure on the EC. The Commission is doing this on the part of the EU, and everybody else out there, including IBM and [Hewlett-Packard].

Q: What is the motivation for the EC itself?
Weiss: We have a pretty common position in Gartner that there is either a misunderstanding or lack of knowledge on the part of the EC where it feels open source can be used as a competitive threat in the market. ... That commission is there to protect the European vendors and opportunities for European common market members. There are vendors with databases that would find Oracle an intimidating presence and may be competing with Oracle not only on the database level but also on the applications level.

Feinberg: It's a political agenda. And although it's pretty strong, for a lack of better term it is the re-emergence of protectionism by a governing body of some organization. The EU is looking for how it can protect the companies in Europe.

Q: Can you give some examples of the companies in Europe?
Feinberg: SAP. Bull. Software AG. Fujitsu is Japanese, but it's big in Europe. There are many European companies that will get stiffer [competition] if Sun is invigorated, which is what would happen if Oracle buys them. Any hardware vendor that competes with Sun today is going to have a tougher time in the future, and the EU is trying to manage that, and they're wrong because that's not their job.

Q: How does the EC gather information or advice to make technology decisions like this?
Feinberg: Honestly, I don't know. You're talking about MySQL, whose revenues are about 0.4 percent of the DBMS market, and there is no other valid measure. Downloads are not a valid measure. The majority of the downloads of MySQL are done at the university and college level by students who use it every day. You can't take downloads and extrapolate that to people using the product commercially. The only measure that is accurate and valid is revenue from support. Now I will grant you that there are a lot of people using it without buying support. So that number, 0.4 percent, is incomplete. However, change it to an order of magnitude of difference, let's say, 4 percent of the market. It's still nothing. The market today is $18 billion that we're comparing this to.

Q: What about the comment from the EC that they see Oracle's databases and MySQL on a fairly even keel as if one competes with the other in the same market?
Feinberg: Not close. Oracle's more in the back office. Data warehousing. MySQL is a minuscule use of data warehousing. Oracle is one of the major vendors. So in data warehousing, they don't compete. In transactions systems, they don't compete. The only place where they overlap is in some of the non-mission-critical applications and in the Web-enabled applications where MySQL is much stronger than Oracle. By the way, my understanding is that part of the reason for these unfair-competition laws is a fear of lack of innovation. If somebody has a monopoly, they don't have to innovate. They can just collect money. Oracle released 11g R2 last Tuesday, the new release of their DBMS, and it's loaded with new functions, some of which are pretty major. So the argument about no new innovation goes away completely. The question that should be asked is not if MySQL gives them an unfair advantage in the market, but does it change the competition between Oracle and IBM, Oracle and Microsoft, Oracle and Sybase? It doesn't affect any of that. I'm not going to say that MySQL isn't going to take away some IBM, some Microsoft, and some Sybase low-end applications. But it doesn't change the major competition in the market for this stuff at all.

Q: Whatever the EC decides about this merger, MySQL is still out there. Wouldn't it pose a competitive threat either way?
Weiss: The only thing the EC may think about is "What if all the users of MySQL are suddenly invaded by an Oracle salesperson who says pay up?" Let's say Oracle creates certain anticompetitive practices in which they try to corral all of these millions of users on the MySQL database to be Oracle customers. Through open source, the only thing you pay for is the subscription support that you either want or don't want, regardless of what Oracle would like you to do. That's why you rarely see a very large monetized open-source vendor in the marketplace. Red Hat may be one of the largest. Maybe Sun could have been considered the largest because they have Open Solaris and Open Office. But in general, vendors have not been able to monetize open source into a billion-dollar business. If Sun couldn't do it, I don't know if Oracle could just because they happen to own another DBMS and then can create a multibillion-dollar business out of this at the expense of European markets.

Q: We've been hearing that IBM and HP have been using the confusion and uncertainty (about the eventual outcome of the planned Oracle-Sun merger) to their advantage. Have you been hearing the same?
Feinberg: Oh yes, absolutely, and not just IBM and HP. But all the hardware vendors that compete with Sun are trying to get Sun users to switch from their hardware platforms on the basis of the turmoil and uncertainty. I don't think it's a valid argument personally, but it's a good marketing technique. Part of the premise is that Sun is losing money like crazy. They had negative 40 percent growth last quarter. There's no question in my mind that this is going to affect that and make it worse. And at some point Oracle has to ask the question, do they still want to buy the company?

Q: Can they still back out at this point?
Feinberg: I don't know the terms of the agreement. It might cost them some money to back out. But of course, Oracle can back out. What happens if Oracle backs out is that Sun's in big trouble. ... With the negative growth they've had, with the uncertainty in the market, with the lack of confidence in Sun, if Oracle backs out of the deal, Sun's left hanging with nothing. So I think it would be devastating to Sun. And who would benefit? All the hardware companies out there, including the European hardware companies.

Q: When the EC says it's conducting an in-depth investigation, what further information can they gather that they don't already have?
Weiss: I don't know because anything that could have been documented out of the DOJ as far as due diligence could have been made available to them. There's lots of information with regard to the different forks that have occurred in MySQL. The only thing that remains is to aggregate this information and understand the working processes and business models that go on in open source and specifically in MySQL. It really would not take a whole lot of technical information; it would be more a business model understanding of how open source works.

Q: Is there anything Oracle can do or say to the EC in a situation like this?
Feinberg: The only thing that Oracle can say is: "Look at our track record. We bought InnoDB. It's an open source product. At the time it was used under a majority of MySQL installations and it still is. If we were doing something wrong with that product, people would stop using it." In fact, Oracle's enhancing it. They have not raised the price in the commercial end of it, and they're giving great support. They also bought a company called Sleepycat a couple years ago and acquired a DBMS called Berkeley DB, which is an open-source product. It's still sold by Oracle. It's enhanced by Oracle, and the customers are being supported by Oracle. So Oracle has bought two open-source products in the DBMS space and has not hurt either of them, but has in fact enhanced them. I suspect that most of the PeopleSoft people out there are getting great customer support today. Look at Oracle's track record of supporting their acquisitions going back to their first major acquisition. They bought a DBMS called RDB from DEC back in the early '90s. They still have people using RDB, and Oracle is still supporting it. It's not open source, but they didn't get rid of the product and didn't hurt the users.

Q: Do you think the EC is going to drag this out to the very end?
Feinberg: The only way they won't drag it out to the very end is if they yield to the market pressure, which they've got to be getting. I would suspect even Sun customers out there would like to see it done soon. So there's got to be market pressure for them to get it done earlier, and unless they yield to that, I think they will drag it right out as long as they possibly can. I don't think we'll see a solution to this until January or February. The only exception being if Oracle backs out, which they would probably do sooner rather than later.

Q: Do you think Oracle will stick it out?
Feinberg: My opinion is yes, I think they will. But again, you're giving into the political side of it, which is hard to predict. You have to ask yourself if Larry Ellison and Charles Phillips (Oracle's CEO and co-president, respectively) just get so fed up with this whole thing that they throw their arms up in the air and say it's not worth it. I would suspect the frustrations have to be running pretty high inside Oracle right now.

Q: If the EC doesn't approve this merger, what would mean for Sun and for Oracle?
Weiss: One scenario is that Oracle walks away from the deal. If MySQL is forced to be divested, or the EC exacts a certain toll from Oracle in penalties for monopolistic positions, Oracle will probably walk away. Sun is then thrust back again on its own looking for a suitor. We know Sun had suitors prior to Oracle. But it's unlikely anybody's going to help Sun out and acquire them like Oracle. That puts some difficult decisions for users on what to do if Oracle cuts Sun loose. Many of them are skeptical about what Oracle will do with Sun anyway. My sense from talking to the users of Sun equipment is that every day is burning a hole in their pockets in their willingness to purchase more Sun equipment. The longer it's postponed, the longer the users have to wonder whether this deal will go through and what the European Commission is going to do with the decision.

Neelie Kroes

(Credit: European Commission)

IBM and Hewlett-Packard could not have planned it any better.

The European Union has launched an in-depth investigation into Oracle's acquisition of Sun, potentially delaying the merger by several more months. In doing so, the EU is actually guaranteeing the demise of Sun's hardware business and gifting it to Sun's competitors by misunderstanding the deal's impact on open source, generally, and on MySQL, specifically.

If you haven't been paying attention, the delay on the merger due to U.S. and EU scrutiny has already resulted in two shockingly bad quarters from Sun. Many enterprise customers are already moving to competitors like IBM because of the uncertainty surrounding the future of Sun products, The Wall Street Journal reports.

Further delay will only compound the problem.

Unlike the U.S., which approved the deal, the EU's Competition Commissioner Neelie Kroes is concerned that Oracle's takeover of Sun will end up diminishing competition:

Systems (like MySQL) based on open-source software are increasingly emerging as viable alternatives to proprietary solutions. The Commission has to ensure that such alternatives would continue to be available.

The Commission doesn't have to. MySQL's open-source license already does. It's open source: even Oracle can't put the open-source genie back in the bottle once it has been released, as MySQL has, under the GNU General Public License.

Consider: some of the folks cheering loudest for the EU to clamp down on the proposed merger, like representatives from Monty Program, have already demonstrated Oracle's (and Sun's) lack of control over MySQL. Monty Program has created a significant fork, or derivative, of the MySQL database, and stands to gain much by the EU's obstructionism.

In delaying the merger, the EU isn't helping MySQL. It's helping its competitors, including Drizzle, OurDelta, MariaDB (Monty Program's fork), Percona, etc.

Competition within and around MySQL is alive and well, regardless of Oracle. After all, as former MySQL CEO Marten Mickos has been saying for years, MySQL has never really competed with Oracle, anyway. MySQL serves (and has helped to create) a very different market: the Web database market.

When asked in April if Oracle's bid for Sun would end up hurting MySQL, Mickos responded: "MySQL works for Web-based applications. Oracle is for older, legacy applications." The vast majority of Oracle's revenue comes from enterprise IT. The vast majority of MySQL's revenue comes from Web companies like Facebook, Google, etc.

MySQL and Oracle don't really compete. They live in two very different markets.

So, if anything, Oracle's acquisition of Sun helps it leverage MySQL into a market--the growing Web database market--that its own technology is ill-equipped to manage. It also gets a lower-cost product with which to bludgeon its real enemy, Microsoft, coupled with a greater footprint in the rising open-source developer community.

Open source is not the enemy in this deal. Microsoft is.

The EU, however, has made itself an enemy to Oracle, Sun, and MySQL by holding up the merger, a situation that will only get worse due to its glacial pace, as CIO.co.uk's editor Martin Veitch suggests. Customers are not the beneficiaries of its intervention: Sun's server competitors like IBM are.

Though the EU purports to be in tune with open source, its meddlesome muddling reveals a surprising ignorance of open source, and shows a complete disregard for MySQL's true market opportunity.

UPDATE @ 6:59 Pacific on 9/4/09: I solicited comment from Gartner vice president and Distinguished Analyst, Donald Feinberg, who had this to say:

The EU does not understand open source. This is clear by using DBMS (MySQL) to extend the deadline. It also is clear that this is an attempt to use MySQL as a cover-up to a political agenda. It is protectionism at its worst.

The EU is entering deep water here, water that it clearly does not adequately understand.

Follow me on Twitter @mjasay.